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ANALYSIS OF AUGUST 15, 2019 SUPREME COURT OPINIONS

(Posted August 15, 2019) After a one-week hiatus, the Supreme Court of Virginia hands down three published opinions this morning.

Insurance

In Llewellyn v. White, the court answer the question whether a tortfeasor is entitled to a reduction from liability when the injured party’s UIM insurer settles with its insured. White, the tort victim, filed an action against Llewellyn seeking $3 million in damages. The tortfeasor had $250K in liability coverage, while the victim had a $1 million policy.

The UIM insurer reached an agreement with its insured and paid her $750,000 – essentially the limits of coverage – and agreed to waive subrogation. A jury later awarded the victim $1.5 million, and the tortfeasor asked for a reduction of the judgment in that amount. The trial court said no, and today the justices affirm that decision.

In so ruling, the court notes that a UIM carrier doesn’t fit the statutory description of a person “liable for the same injury.” That’s in Code §8.01-35.1, which normally requires a dollar-for-dollar reduction when a victim settles with one party who’s liable. But a carrier isn’t a tortfeasor; the victim’s claim against it sounds in contract, not tort.

The collateral-source rule also counsels affirmance here. The justices cite with approval a recent decision of the North Carolina Supreme Court, making the wise victim – who chose to purchase plenty of UIM coverage – the beneficiary of any windfall, rather than the tortfeasor who chose to drive around underinsured.

Justice Goodwyn authors today’s decision for a unanimous court.

Torts

The opinion in A.H. v. Church of God in Christ is all about pleading and duties to protect. It arises from allegations of child sexual abuse against a church deacon, while the victim was between four and eight years old. Her parents filed a next-friend action against the deacon and others, including the local church and the national denomination.

The trial court sustained demurrers filed by the church and the denomination. The parents nonsuited the remaining claims to create finality, and appealed. Today the Supreme Court reverses in part and remands the case for further proceedings on two claims. Here, in summary, are the key rulings:

The justices affirm the dismissal of assumed-duty claims, based on the recent truncation of that doctrine in Terry v. Irish Fleet (holding that an assumed duty must rest on an express promise to protect). They reverse, however, for trial on a special-relationship claim.

The court affirms the dismissal of negligent hiring, retention, and supervision. The hiring claim fails because the church hired the perpetrator before his first instance of abuse (upon a different victim) occurred after he was hired. The retention claim fails because that requires a showing that nothing short of termination would suffice, and the parents had pleaded that the church should have taken some restrictive measures short of firing. And Virginia simply doesn’t recognize a claim for negligent supervision.

The court also affirms the dismissal of a negligence per se claim, reaffirming that a statute that creates a standard of care doesn’t also create a duty of care. That duty has to exist otherwise.

The parents pleaded a claim for negligent infliction of emotional distress. The court rules that that claim can proceed, but it’s subsumed within the two surviving claims, not as an independent cause of action.

Finally, the complaint stated a claim for pure respondeat superior liability, since it alleged that the perpetrator abused the child while performing services in his capacity as a church employee.

Justice McClanahan dissents in part. She agrees that there’s a respondeat superior claim, but feels that the complaint doesn’t plead facts sufficient to state a special-relationship claim.

I’ll add one observation here. Previous caselaw, stretching back to the last century, has held that when the Supreme Court reviews a demurrer, it accepts as true all of the plaintiff’s factual allegations, plus all the reasonable inferences that may be drawn from them. I’ve noticed that recent SCV jurisprudence is clawing back some of that liberality.

Last year, in Coward v. Wellmont Health System, Justice Kelsey emphasized that a fact must be “expressly pleaded” and cast a skeptical judicial eye on inferences that “are strained, forced, or contrary to reason.” The opinion then went on to reject several claimed inferences on that basis.

Today, the court again emphasizes, on page 2 of the slip opinion, that the courts aren’t bound by what they find to be unreasonable inferences. Not coincidentally, Justice Kelsey also writes today’s majority opinion. You should regard him as effectively leading the charge to rein in the use of inferences in demurrer analysis. On the same page, he cites with approval the two watershed federal pleading-analysis decisions, Ashcroft v. Iqbal and Bell Atlantic v. Twombly. Virginia has long resisted Iqbal and Twombly analysis, where a federal judge first decides how plausible the plaintiff’s claims are. In our jurisprudence on the correct side of the Potomac, juries, not judges, decide what’s plausible.

If this is the federal camel’s nose creeping under the Virginia pleading tent, get ready for some major changes in demurrer rulings.